ZeroFive with John Scotchmer
In this episode John Scotchmer from Sucden Financial sits down with us and discusses what types of technology could have the biggest impact on the post-trade space, major challenges facing the industry and the future of digital asset classes.
The video can be viewed on ZeroFive, below is a transcript of what John had to share.
Reece Chapman: Welcome to another episode of ZeroFive. Today, I’m joined by John Scotchmer from Sucden Financial. Thank you for joining us today John. If you’d like to just take a quick moment to introduce who you are and your background in the financial sector.
John Scotchmer: I’m the Head of Operations here at Sucden Financial. I’ve been at Sucden for around four and a half years now. Our operations team is around 27 strong. We cover all aspects of operations from middle office trade support, clearing and reconciliations. Prior to joining Sucden, I have around 30 years of experience across various different operational roles within brokers and tier one banks.
Reece Chapman: To kick things off, what do you think is driving change in post-trade processing today?
John Scotchmer: I’d say the ability to do what I do today, tomorrow, but for less. So whether that’s greater drive for full STP processing within ops through greater automation. Whether that’s less resources to be able to do what I do today, but with less. I think that’s what drives any change within post-trade processing today.
Reece Chapman: And do you foresee any specific type or types of technology having the biggest impact on the post-trade space?
John Scotchmer: I believe it’s quite a crowded marketplace, there are a lot of systems out there. There are lots of systems we use and maintain in order to manage our day-to-day processing. I think anything that can consolidate and fit in between those systems, whether that’s message normalization. I think that’s where the biggest impact would be had on any technology that’s being used in the post-trade space.
Reece Chapman: I’m sure you’ve had many internal discussions about AI, but what effect are you anticipating it to have?
John Scotchmer: AI and the impact it can possible have on us. I think we’re already seeing huge types of AI being used to and assisting us in some of the business flows. Through understanding our repetitions and suggesting how we might want to set up rules for clearing etc., on that. Other types of AI that are having an impact would be trading platforms that use AI in order to predict what may need to happen based upon a portfolio that a client has. Or we have clients that want to trade by using an algorithm to take advantage of arbitrage opportunities from some of the markets we clear. So I think that’s really some of the major impact that AI can have, certainly upon us here at Sucden. But I think it’s always important to understand that any type of AI needs the understanding of a person that understands the mechanics of what goes into that before it can actually start to bear fruit.
Reece Chapman: Interesting, and moving back to the post-trade space, what do you still see as the major challenges that will need to be overcome?
John Scotchmer: I think the major challenges that we need to overcome, is ensuring that we’re as resilient as possible in being able to set ourselves up to deal with the next thing that creates market disruption. I think at the moment we have the Ukraine and Russian conflict. We have a revolving door at 10 Downing Street at the moment and some of the impact that’s having on the markets that we clear. So I think for us, it’s always about are we resilient? Do we feel that we’ve got the necessary control functions in place to be able to deal with what’s being thrown our way. I believe we are. But it’s always good to question ourselves and make sure that we are resilient.
Reece Chapman: Finally, ending off with a bit of a hot topic. What do you forecast the impact of digital asset classes being?
John Scotchmer: So the effect of digital asset classes, we haven’t really seen a client demand here at Sucden. So it isn’t something that we offer up at this moment in time. That said, it’s a huge area of growth. The markets that we clear are offering products within these asset classes. So never say never. But the demand there isn’t there at this moment in time. Although we are going through a digital transformation project at the moment, we’re a couple of years into that and hopefully one of the advantages of that will be an ability to be able to handle these products in the future should the demand come.
Reece Chapman: Thank you for joining us today, John, and we hope to see you all again soon.
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